We are witnessing a Second Bounce in Kenya
With eight-lane highways, in-car high-speed WIFI, two or more central business districts, three major shopping centres filled with multinational financial services companies and retailers, multiple office buildings exceeding 20 stories, and advanced mobile banking systems, The “Second Bounce” is in action in Nairobi.
Land Prices (KsH per Acre)
In Nairobi, land prices have increased by almost 5x in the past seven years.
According to HassConsult, land prices have appreciated by 535% with the price of an acre in Upper Hill priced at almost 470million Ksh.
Unprecedented growth in construction of residential communities and commercial buildings in Upper Hill, Kilimani, Westlands and other areas of Nairobi has led to land prices to outperform all other asset classes in return on investment.
Source: HassConsult Real Estate, Business Daily Africa.
Exponential increases from Foreign Direct Investment (FDI) that is targeting regional extractive sector activity, encouraging demographics, and high cellular penetration is paving the way for the necessity for major developments in service providers. It is what we at Sunbird refer to as “The Second Bounce of Ball” and it is what we are positioned for - providing integrated construction and support services for the next wave of enterprise entering the region.
"The Second Bounce is in action in Nairobi"
Cement Production in Kenya
According to data from the Kenya Bureau of National Statistics (KNBS), consumption of cement has increased by almost 10% between Q2 2014 and Q2 2015.
This growth in cement production reflects an overall growth in economic performance of 4.9% in Q1 2015 from Q1 2014, boosted by an 11.3% growth in the construction and real estate sectors in the same period.
Source: Knight Frank, KNBS.
Similar to the Out of Town shopping model that made a major impact in the United Kingdom, the consequences of rapid urbanisation towards centres of opportunity on the entry of multinational businesses, land values, requirements for office space and accommodation, and its subsequent impact on rising middle class incomes has led to many relocating themselves outside of Nairobi. The increase in the number of commuters living outside of the city has led to the development of major road construction such as the $360m, eight-lane Thika Superhighway connecting Nairobi and Thika, as well as the Garden City Mall, home to such international brands such as Nakumatt, Huawei, Woolworths and Levi’s to enter the market. This compliments other multinational companies that include PWC, Oracle, and MasterCard that also have opened offices in the Westlands area.
Mobile Money Subscriptions in Kenya
M-Pesa has built a mobile money system that has lowered transaction costs significantly for customers in Kenya.
The number of mobile money subscriptions has grown in Kenya from 1.2m in 2007 to 28m by April 2015. M-Pesa has been adopted by approx. 95% of households in Kenya.
The result is an almost 5% increase in the average Household Consumption per Capita in Kenya, and furthermore the impact on reducing the number of farmers in agriculture, towards those opening a business.
Source: FSD Kenya, MIT Sloan Management
At $128billion invested in 2014, Africa has become the world’s second largest FDI destination and East Africa is in need of services. The result is a market that is increasingly calling for services that target innovation and efficiency, or what Sunbird refers to as “The Next Bounce”, which is the next wave of major enterprise growth to enter the region of East Africa. Sunbird is in a position to offer a variety of construction and support services that evolve with our client’s needs.
For more exciting information, please view our 2016 Market Reports available below.